By James Anyanzwa
Nairobi Stock Exchange (NSE) has approved the inclusion of KenolKobil as an Index constituent company in the Industrial and Allied sector.
The oil marketer replaces East African Cables Ltd from the 20 blue-chip companies forming the NSE 20-Share Index. The changes took effect from on Friday.
Announcing the changes, Peter Mwangi, NSE chief executive, said constituent companies of the NSE 20-Share Index require to be reviewed periodically to reflect an accurate picture of market performance.
“Following a recent review, the Board of the NSE approved the inclusion of KenolKobil Ltd as an index constituent company in the Industrial and Allied sector, replacing East African Cables Ltd,” Mwangi said on Saturday.
NSE has two market indices, the price weighted NSE 20-Share Index and the market capitalisation weighted all-inclusive NSE All-Share Index.
Regular review
Price weighted indices are based on a geometric mean of average prices of the constituent companies, which are equally weighted.
The criteria of selecting companies include trading activity measures. Market Capitalisation, shares traded, deals/liquidity and turnover during the period under review are weighed in the ratio of 4:3:2:1.
A company must also have at least 20 per cent of its shares quoted at the NSE, a minimum market capitalisation of Sh20 million and should ideally be a ‘blue chip’ with superior profitability and dividend record.
